H&M Supply Chain
Page 2. Introduction
2. Company Background
4. Supply Chain Structure
6. Supply Chain Flowchart
7. Conclusions and Recommendations
This report provides an analysis of the supply chain of H&M and management of that supply chain. A brief company background will be established to better understand the analyses that follow. These analyses will include the structure of the supply chain; key challenges within the supply chain; competitive strategies used to differentiate H&M’s supply chain; value adding activities in the supply …show more content…
Approximately 60% of production takes place within the Asian branch of the supply chain with H&M placing orders for hundreds of thousands of units of simpler, basic apparel. These order sizes mean that H&M can command enormous unit cost reductions, which it is then able to pass onto the consumer.
The rapid response supply chain can produce garments with a lead time of just 20 days, 5 days longer than its rival Zara which using its own vertically integrated supply chain can have new garments from concept to shop floor within 15 days. However this extra time allows H&M to offer product at 30-50% of the price of Zara, giving it a clear cost advantage.
Cost is a priority in the H&M supply chain and the brand therefore establishes its production bases in areas of inexpensive but skilled labour. H&M further cuts costs by having as few middlemen as possible, acting as importer and wholesaler, as well as retailer. However H&M does not own any of its own factories but relies on around 800 independent suppliers and manufacturers from a variety of countries within both Europe and Asia. This is another key differential in their supply chain which allows the brand to maintain